Post by mineralsrus on Jan 17, 2006 10:01:37 GMT -4
FORMER ATTORNEY PLEADS GUILTY TO RACKETEERING CONSPIRACY
LAS VEGAS - - One of five defendants charged in August 2003 with participating in an elaborate corporate and securities fraud scheme in Nevada and elsewhere, pleaded guilty today before U.S. District Judge James C. Mahan, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
SHAWN HACKMAN, age 35, a former attorney from Las Vegas, pleaded guilty to one count of Racketeering Conspiracy and agreed to a Criminal Forfeiture (of property obtained through Racketeering). He is facing up to 20 years in prison and a $250,000 fine when he appears before Judge Mahan for sentencing at 9:00 a.m. on May 10, 2004.
On August 7, 2003, SHAWN HACKMAN and three other attorneys, Sean Flanagan, Daniel Chapman, Herbert Jacobi, and stock transfer agent James Farrell, were charged in a 64-count Indictment. The Indictment alleges that between 1994 and 1999, they participated in a scheme involving the creation and sale of fraudulent shell corporations, commonly known in the securities industry as "box jobs." A few of the shell corporations involved in the scheme included Professional Mining Consultants, Inc., Dream Team International, Inc., and K-9 Protection, Inc. These shell corporations were fraudulent because promoters obtained hidden control of the entire supply of the public company's securities creating a secret monopoly in which control of the shell corporation and its stock was concealed by the use of nominee officers, directors and shareholders. When a company's securities are secretly "locked up" by the promoters, it is not possible for free-market trading to take place. The promoters are able to push stock prices up arbitrarily by simply restricting the supply, and once the price is at the desired level, the promoters and their associates "dump" their stock holdings on the market causing an immediate crash of the price of the stock. The public buyers caught in the middle lose most or all of their investment.
HACKMAN admitted in his plea agreement that, from at least July 1995 to about November 30, 2001, he and co-defendants Sean Flanagan, Daniel Chapman, Herbert Jacobi, James Farrell, and others known and unknown, were members of a criminal organization whose members engaged in securities fraud, money laundering, wire fraud, mail fraud, interstate transportation of stolen securities and receipt and sale of stolen securities for the purpose of enriching the members and deceiving the Securities and Exchange Commission.
In addition to the creation of shell corporations and installation of nominee officers and directors, HACKMAN admitted that the scheme involved among other things:
• fabrication of corporate records and stock records;
• mergers of the shell corporations with private companies,
• formation of companies in the Bahamas to cover up the fraud;
• Retaining of attorneys to issue false and misleading legal opinions indicating that the stocks of the shell corporations were freely tradable pursuant to federal securities laws, when in fact, they were not.
HACKMAN also admitted that another Las Vegas resident, Peter Berney, hired him and the other attorneys to issue false and misleading legal opinions, caused the nominees to be installed, and arranged for the mergers of the shell corporations with the private companies.
Investigators determined that Peter Berney and numerous other individuals were involved in the creation and sale of over 60 boxed companies between 1994 and 1999 for proceeds in excess of $35 million. Peter Berney, his wife Rebecca Berney, and another Las Vegas resident, Robert Potter, were indicted in July 2001 and charged with Money Laundering Conspiracy. Potter pleaded guilty and the charges against Rebecca Berney were dismissed following successful completion of a pretrial diversion program. Court information regarding Peter Berney is sealed.
HACKMAN is released on a personal recognizance bond pending sentencing.
Co-defendants Sean Flanagan, Daniel Chapman, Herbert Jacobi, and James Farrell are currently scheduled for trial on June 15, 2004.
This case is being investigated by Internal Revenue Service-Criminal Investigation and the FBI's Organized Crime Squad, and is being prosecuted by Assistant U.S. Attorney J. Gregory Damm.
Fraud scheme case promises to set local legal community on its ear
Shawn Hackman didn't distinguish himself as an attorney in Las Vegas, but for a while he sure excelled as a criminal.
There's a lawyer joke in there somewhere, but the trouble in which Hackman finds himself is anything but humorous.
Hackman, 35, on Thursday pleaded guilty in U.S. District Court to one count of racketeering in a case that promises to turn Southern Nevada's legal community upside down: the 64-count indictment of lawyers linked to what authorities believe is the largest "boxed stock" fraud scheme in local history.
A conservative estimate of the profit from the sale of stock in more than 60 cardboard pump-and-dump companies is $35 million. Sources with knowledge of the setup say that number might represent less than 20 percent of the actual amount separated from investors who believed they were buying freely traded stock.
In exchange for his guilty plea, Hackman has agreed to cooperate fully against the remaining defendants: James Farrell of Sandy, Utah, and attorneys Sean Flanagan and Daniel Chapman of Las Vegas and Herbert Jacobi of New York. Their trial is set for June 15 in U.S. District Judge James Mahan's court.
Hackman, who faces up to 20 years in prison, is in line to receive a downward departure from the federal sentencing guidelines if he provides "substantial assistance," according to his plea agreement.
If Hackman's testimony holds up, it will bolster the government's paper-heavy prosecution against the remaining defendants. The case is being investigated by the Internal Revenue Service's Criminal Investigation unit and the FBI's Organized Crime Squad.
Hackman, after all, was in position to view the operation with his own eyes. And he admits he benefitted illegally from the scheme, which allegedly committed acts of "securities fraud, money laundering, wire fraud, mail fraud, interstate transportation of stolen securities and receipt and sale of stolen securities," according to the plea agreement, which was secured by Assistant U.S. Attorney J. Gregory Damm of the Organized Crime Strike Force.
As part of Hackman's deal, he also admitted he was hired by Las Vegan Peter Berney to "issue false and misleading legal opinions" associated with the fraudulent stocks. Hackman also participated in creating front men as corporate officers and helped set up mergers of the phony shell corporations with private companies.
As a result, he said, investors were led to believe they were purchasing shares in legitimate companies with names like Big Tex Enterprises Inc., Tera West Ventures Inc., Dream Team International Inc., Far East Ventures Inc. and Custom Leathers of Las Vegas Inc., among many.
After the shells merged with private companies, Berney, Las Vegan Robert Potter, and others would dump their shares and reap millions. Potter has subsequently pleaded guilty to money laundering conspiracy.
Although it's clear from the indictment and Hackman's plea agreement that Berney is the central figure in the investigation, his part of the case remains sealed. And for good reason.
This case is arguably the largest "boxed stock" fraud investigation in Southern Nevada history, but it's even bigger than that.
Take Jacobi, for instance. He pleaded guilty in October 2001 to plotting to obtain records stolen from the Las Vegas office of the FBI. Jacobi and Potter received the confidential documents from FBI employee James Hill, who later pleaded guilty. Jacobi paid former FBI agent Michael Levin for documents he believed to be authentic.
"It doesn't take much to figure out who's pulling that information from that computer," Jacobi told Levin.
Trouble for the lawyer was, the double-dealing Levin had already cut his own gig with the government and was wearing a wire.
As if that weren't compelling enough, Potter has been identified as part of a mob-connected pump-and-dump stock scheme in New York. One of Potter's alleged partners was an associate of the Genovese crime family.
It was into the middle of this insanely lucrative and dangerous high-wire world of stock fraud that Shawn Hackman found himself.
It's no wonder he wanted out.
LAS VEGAS - - One of five defendants charged in August 2003 with participating in an elaborate corporate and securities fraud scheme in Nevada and elsewhere, pleaded guilty today before U.S. District Judge James C. Mahan, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
SHAWN HACKMAN, age 35, a former attorney from Las Vegas, pleaded guilty to one count of Racketeering Conspiracy and agreed to a Criminal Forfeiture (of property obtained through Racketeering). He is facing up to 20 years in prison and a $250,000 fine when he appears before Judge Mahan for sentencing at 9:00 a.m. on May 10, 2004.
On August 7, 2003, SHAWN HACKMAN and three other attorneys, Sean Flanagan, Daniel Chapman, Herbert Jacobi, and stock transfer agent James Farrell, were charged in a 64-count Indictment. The Indictment alleges that between 1994 and 1999, they participated in a scheme involving the creation and sale of fraudulent shell corporations, commonly known in the securities industry as "box jobs." A few of the shell corporations involved in the scheme included Professional Mining Consultants, Inc., Dream Team International, Inc., and K-9 Protection, Inc. These shell corporations were fraudulent because promoters obtained hidden control of the entire supply of the public company's securities creating a secret monopoly in which control of the shell corporation and its stock was concealed by the use of nominee officers, directors and shareholders. When a company's securities are secretly "locked up" by the promoters, it is not possible for free-market trading to take place. The promoters are able to push stock prices up arbitrarily by simply restricting the supply, and once the price is at the desired level, the promoters and their associates "dump" their stock holdings on the market causing an immediate crash of the price of the stock. The public buyers caught in the middle lose most or all of their investment.
HACKMAN admitted in his plea agreement that, from at least July 1995 to about November 30, 2001, he and co-defendants Sean Flanagan, Daniel Chapman, Herbert Jacobi, James Farrell, and others known and unknown, were members of a criminal organization whose members engaged in securities fraud, money laundering, wire fraud, mail fraud, interstate transportation of stolen securities and receipt and sale of stolen securities for the purpose of enriching the members and deceiving the Securities and Exchange Commission.
In addition to the creation of shell corporations and installation of nominee officers and directors, HACKMAN admitted that the scheme involved among other things:
• fabrication of corporate records and stock records;
• mergers of the shell corporations with private companies,
• formation of companies in the Bahamas to cover up the fraud;
• Retaining of attorneys to issue false and misleading legal opinions indicating that the stocks of the shell corporations were freely tradable pursuant to federal securities laws, when in fact, they were not.
HACKMAN also admitted that another Las Vegas resident, Peter Berney, hired him and the other attorneys to issue false and misleading legal opinions, caused the nominees to be installed, and arranged for the mergers of the shell corporations with the private companies.
Investigators determined that Peter Berney and numerous other individuals were involved in the creation and sale of over 60 boxed companies between 1994 and 1999 for proceeds in excess of $35 million. Peter Berney, his wife Rebecca Berney, and another Las Vegas resident, Robert Potter, were indicted in July 2001 and charged with Money Laundering Conspiracy. Potter pleaded guilty and the charges against Rebecca Berney were dismissed following successful completion of a pretrial diversion program. Court information regarding Peter Berney is sealed.
HACKMAN is released on a personal recognizance bond pending sentencing.
Co-defendants Sean Flanagan, Daniel Chapman, Herbert Jacobi, and James Farrell are currently scheduled for trial on June 15, 2004.
This case is being investigated by Internal Revenue Service-Criminal Investigation and the FBI's Organized Crime Squad, and is being prosecuted by Assistant U.S. Attorney J. Gregory Damm.
Fraud scheme case promises to set local legal community on its ear
Shawn Hackman didn't distinguish himself as an attorney in Las Vegas, but for a while he sure excelled as a criminal.
There's a lawyer joke in there somewhere, but the trouble in which Hackman finds himself is anything but humorous.
Hackman, 35, on Thursday pleaded guilty in U.S. District Court to one count of racketeering in a case that promises to turn Southern Nevada's legal community upside down: the 64-count indictment of lawyers linked to what authorities believe is the largest "boxed stock" fraud scheme in local history.
A conservative estimate of the profit from the sale of stock in more than 60 cardboard pump-and-dump companies is $35 million. Sources with knowledge of the setup say that number might represent less than 20 percent of the actual amount separated from investors who believed they were buying freely traded stock.
In exchange for his guilty plea, Hackman has agreed to cooperate fully against the remaining defendants: James Farrell of Sandy, Utah, and attorneys Sean Flanagan and Daniel Chapman of Las Vegas and Herbert Jacobi of New York. Their trial is set for June 15 in U.S. District Judge James Mahan's court.
Hackman, who faces up to 20 years in prison, is in line to receive a downward departure from the federal sentencing guidelines if he provides "substantial assistance," according to his plea agreement.
If Hackman's testimony holds up, it will bolster the government's paper-heavy prosecution against the remaining defendants. The case is being investigated by the Internal Revenue Service's Criminal Investigation unit and the FBI's Organized Crime Squad.
Hackman, after all, was in position to view the operation with his own eyes. And he admits he benefitted illegally from the scheme, which allegedly committed acts of "securities fraud, money laundering, wire fraud, mail fraud, interstate transportation of stolen securities and receipt and sale of stolen securities," according to the plea agreement, which was secured by Assistant U.S. Attorney J. Gregory Damm of the Organized Crime Strike Force.
As part of Hackman's deal, he also admitted he was hired by Las Vegan Peter Berney to "issue false and misleading legal opinions" associated with the fraudulent stocks. Hackman also participated in creating front men as corporate officers and helped set up mergers of the phony shell corporations with private companies.
As a result, he said, investors were led to believe they were purchasing shares in legitimate companies with names like Big Tex Enterprises Inc., Tera West Ventures Inc., Dream Team International Inc., Far East Ventures Inc. and Custom Leathers of Las Vegas Inc., among many.
After the shells merged with private companies, Berney, Las Vegan Robert Potter, and others would dump their shares and reap millions. Potter has subsequently pleaded guilty to money laundering conspiracy.
Although it's clear from the indictment and Hackman's plea agreement that Berney is the central figure in the investigation, his part of the case remains sealed. And for good reason.
This case is arguably the largest "boxed stock" fraud investigation in Southern Nevada history, but it's even bigger than that.
Take Jacobi, for instance. He pleaded guilty in October 2001 to plotting to obtain records stolen from the Las Vegas office of the FBI. Jacobi and Potter received the confidential documents from FBI employee James Hill, who later pleaded guilty. Jacobi paid former FBI agent Michael Levin for documents he believed to be authentic.
"It doesn't take much to figure out who's pulling that information from that computer," Jacobi told Levin.
Trouble for the lawyer was, the double-dealing Levin had already cut his own gig with the government and was wearing a wire.
As if that weren't compelling enough, Potter has been identified as part of a mob-connected pump-and-dump stock scheme in New York. One of Potter's alleged partners was an associate of the Genovese crime family.
It was into the middle of this insanely lucrative and dangerous high-wire world of stock fraud that Shawn Hackman found himself.
It's no wonder he wanted out.